Moodyʼs Investors Service upgraded its rating for several banks operating on the Hungarian market this week, including K&H Bank, Erste Bank Hungary, Budapest Bank and MKB Bank. The move comes shortly after the ratings agency changed its macro profile for the country from “Weak+” to “Moderate-”, indicating the Hungarian banking sector has improved, particularly in regards to “the gradual recovery in credit demand.” Moody’s added that it expects Hungary’s lending stock will grow by 5 percent over the next 12 to 18 months.
“The improving operating environment benefits Hungarian banksʼ standalone [baseline credit assessments] by helping to reduce the high level of problem loans, restoring their profitability after several years of losses, and strengthening capitalization,” Moody’s said in a statement. “A further improvement in the operating environment for Hungarian banks leading to a considerable reduction in problem loans and stronger capital ratios, could have positive rating implications.”
